don't waste your time on a compression test. A leak down test will tell you the same thing but also tells you where the problem is coming from. If you hear the air in the intake, the intake valve is the problem. If you hear it in the exhaust and if you hear it in the oil breather and so on you know the story.

 

Been there, done that. It's valve seals, trust me. I've got a '93 Terc and it did exactly the same thing. Everyone thought it was the rings but it wasn't. The valve seals are really sh**ty on these cars.

Depending on the year, you will need a special wrench to remove the head. It's called a "double allen" socket or something...

 

If you use the leak down tester as a cylinder pressurizer, you will not have to remove the heads to replace the valve seals. The pressure will hold the valves in place.
Saves a lot of time

 

check out this site before you do anything. looks like toyota is having some design problems. http://www.yotarepair.com/Sludge_Zone.html